Estonian Railways trying to lure Kazakhstan coal to Estonia

Rail transit.
Rail transit. Source: Siim Lõvi/ERR

Estonian Railways has introduced a cheaper rate for coal from Kazakhstan in an attempt to bring transit to Estonia. According to the plan, Estonian Railways and ports could move 30,000-50,000 tons of coal a month yielding the same figure in euros.

State-owned freight carrier Operail turned to Estonian Railways in June, asking for a cheaper usage fee rate for coal from Kazakhstan, minutes of an Estonian Railways supervisory board meeting reveal.

Coal from Russia and Kazakhstan has mostly moved through Latvia so far, while transit volumes have fallen recently. Operail is in talks for moving Kazakh coal through Estonia in the volume of 30,000-50,000 tons a month. Estonian Railways is competing with Latvian Railways that charges €6-7 per ton.

Operail asked Estonian Railways to lower the infrastructure usage fee for coal from €2.2 per ton to €1.1 per ton to have it cost €6-7 per ton for the customer as it does in Latvia. The latter agreed.

Estonian Railways find that coal transit from Kazakhstan could yield it €30,000 per 30,000 tons of coal. The cheaper rate would initially remain in place until the end of the current schedule after which the results would be analyzed and a new decision made.

At the same time, political pressure between Kazakhstan and Russia has lowered the likelihood of coal trains coming to the area. Arthur Raichmann, head of commerce for Estonian Railways, said during a supervisory board meeting in early July that test trains could be moving soon, while more recent information from Vero Logistika suggests business interests are feeling the squeeze because of strained Kazakhstan-Russia relations.

Raichmann added that this does not mean Estonia will surely not see any coal, which is why it is good to have price agreements in place.

Estonia has two terminals with the capacity for handling coal -- one in Muuga that has handled up to 50,000 a month in the past and a smaller terminal in Sillamäe.

CEO of Estonian Railways Kaido Zimmermann said that the company would count on the Stivis AS terminal in Muuga that is currently handling gravel but can be converted to receive coal.


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Editor: Marcus Turovski

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